Basic Economic Order Quantity EOQ Model economics homework help

The owner of a diner has summarized the price lists from four potential vendors (see the following table) who want to supply her with cooking oil. Monthly usage is 300 gallons, ordering cost is $10 per order, and the monthly carrying cost is $ .50 a gallon.

Which vendor should she use, and what order quantity is best if she wants to minimize total annual costs (TMC).


Quantity Price Quantity Price Quantity Price Quantity Price

1-99 $25 1-79 $25 1-25 $27 1-59 $26

100-399 24 80-139 24 26-89 25 60-139 25

400+ 22 140-299 23 90-199 24 140-249 24

300+ 22 200+ 23 250+ 23

Since demand and carrying costs are both expressed on a monthly basis, you will need to multiply these values by 12 to put into annual terms. You will be using an EXCEL template that has already been created for quantity discount inventory problems and can be found at Stevenson’s online learning center ALL 8 OUTPUT PAGES MUST BE INCLUDED IN ANSWER!

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